Mortgage rates inched lower this week, dropping two basis points to 6.87%. However, experts warn that much lower rates may be out of reach due to ongoing market fluctuations.
The US Treasury yields rose sharply on Wednesday after Consumer Price Index data showed inflation exceeding the Federal Reserve’s 2% goal. This increased uncertainty about interest rate cuts led traders to pare back their expectations for further Fed reductions.
According to Zillow senior economist Kara Ng, “Markets are driving mortgage rates to fluctuate weekly due to a lack of clarity and range of potential outcomes.” Realtor.com senior economist Joel Berner agrees, stating that “Mortgage rates are unlikely to drop much anytime soon” as investors demand higher returns to account for weakening spending power.
The recent market volatility may have a neutral effect on mortgage rates, keeping them within the narrow range of 6.9% to 7%. Experts anticipate low odds of interest rate cuts before September and warn that sub-4% mortgage rates are unlikely to return anytime soon if inflation continues to resist being tamed.
Source: https://finance.yahoo.com/news/stock-and-bond-prices-are-whipping-around-weirdly-thats-leaving-mortgage-rates-stuck-near-7-170219725.html